By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices fell Friday, pushing yields higher, ahead of the initial Federal Reserve buyback of government debt under the U.S. central bank’s second round of so-called quantitative easing.
Treasurys, prices of which move inversely to their yields, also came under pressure as officials in debt-ridden Ireland denied rumors that the country would receive a bailout.
Yields on benchmark 10-year notes (UST10Y 2.70, +0.05, +2.04%) rose 5 basis points to 2.70%. A basis point is 0.01%.
Yields on 2-year notes (UST2YR 0.47, +0.04, +8.35%) jumped 4 basis points to 0.47%.
Bond markets were closed on Thursday for Veterans Day.
The Fed expects to buy $6 billion to $8 billion in debt maturing between 2014 and 2016. See the U.S. central bank’s buyback schedule.
“We will look for the market to focus on the Fed’s purchase,” said John Spinello, bond strategist at Jefferies & Co.
A report on U.S. consumer sentiment is also due at 10 a.m. Eastern time.
Irish bond yields have jumped by more than two percentage points since October amid worries that the country may need financial aid from the European Union, and that bondholders may be required to take losses.
Denials from officials in Dublin earlier Friday who said that such a bailout wouldn’t be needed provided some support for Irish debt, taking away some demand for the relative safety of German debt and U.S. Treasurys. Read more on Ireland, European bonds.
“The issues in the euro and the peripherals are likely to stay with the market for several weeks, perhaps a year-end stressor, and so on the margin the dollar represents a bit of a haven,” said strategists at CRT Capital Group.
Also, the extra yield on Treasurys compared to German bunds “may provoke some interest,” they said. Germany’s 10-year bunds yield 2.49%.
